Analysis: The Tories' plans don't match their numbers

The Progressive Conservatives’ own analysis of Tim Hudak’s plan for Ontario is a lot more radical than Hudak says his plans are. Here’s a description of the gap and how Hudak explains it.

Q Where’s this analysis coming from?

A To show that they’re serious about their promise to add a million private jobs to Ontario’s economy over eight years, the Progressive Conservatives commissioned a private economist to explain how the plan would work. They picked Benjamin Zycher, a Californian who’s associated with the Pacific Research Institute and the American Enterprise Institute, intellectual cousins of Canada’s Fraser Institute. The Tories released his study, dated last March, on Tuesday while Hudak gave a lunch speech at the Chateau Laurier.

Q What does Zycher say about the Tories’ plans?

A Zycher didn’t study them. His work was done months before the current election campaign and it’s not based on the specifics of what Hudak says he would do as premier. It’s a more philosophical take on eliminating regulations, giving up on green energy, cutting corporate taxes, and reducing trade barriers with other provinces.

Zycher’s estimates of the benefits of cutting regulations ($27 billion added to the economy, 10,600 new jobs) and scrapping green-energy subsidies ($20 billion added to the economy, 5,048 new jobs) are copied into the Tories’ “million jobs plan.” Though where Zycher counts those numbers as the “total benefit” he foresees to the economy, the Tories say they’d keep on giving, adding up to 120,000 new jobs by the end of eight years.

Q If Zycher’s work isn’t based on the specific things Hudak says he’d do, what is it based on?

A An idealized conservative image of how a government would behave. The really big deal in Zycher’s analysis is cutting regulations. He uses figures from the Fraser Institute, ranking Canadian provinces and U.S. states in terms of their economic freedom, and calculates that if Ontario remodelled itself on Alberta — the freest place the Fraser Institute found — it would be worth $2,000 more in annual productivity per person. Minimum wages, unionization and government employment all count against a province’s or state’s freedom rating.

Q What sorts of policies are problems in Ontario, according to Zycher?

A Zycher does single out two things. Recycling is one, because the market for recycled materials should dictate what’s worth collecting. “One rationale for the Blue Box recycling program is that it recovers ‘valuable resources,’ as if the recycling effort itself does not consume ‘valuable resources’,” Zycher writes. “More generally: What is the rationale for the implicit assumption that the market recycles too little?”

The other is the Far North Act, which spells out the way the Ontario government and private industry have to work with existing residents and First Nations to log and mine in Northern Ontario. It also puts 225,000 square kilometres of the North off-limits to that kind of development.

Neither criticism is crazy: municipal recycling programs often collect things that cost more to recycle than they’re worth. The Far North Act’s critics include some First Nations, who argue that the Ontario government can’t override their treaty rights with the Crown and limit their economic potential.

Q What about energy? What does Zycher have to say about that?

A Zycher’s model assumes Ontario’s energy costs will decline to the national average from a level that in Zycher’s analysis is about 20 per cent higher. That average is based on the national mix of power sources, which includes hydroelectricity, nuclear power, gas-fired generating stations, solar and wind farms and coal plants. The last of these provide some of the cheapest power around, but Ontario has phased them out.

Q So is Hudak’s plan based on Zycher’s model for Ontario?

A Not precisely. Hudak says he’s a fan of blue-box recycling. But he isn’t a fan of Waste Diversion Ontario, which promotes recycling and — most problematically — oversees the “eco-fees” that retailers charge when consumers buy hard-to-dispose-of products like tires and electronics.

When it comes to electricity, Hudak’s plan is to eliminate the next batch of subsidized contracts with green-energy producers, build nuclear stations, and try to buy power from Manitoba and Quebec, which is not the same as having Ontario’s generation mix match the national average.

Q How seriously should we take the Tories’ numbers, then?

A Zycher’s projections might be fine on their own, but they can’t reasonably be used to forecast the economy under a Tory government because they aren’t based on the policy proposals the Tories have been making. If Hudak would govern Ontario the way Zycher thinks he should, he isn’t saying so.

Hudak says that at least he has a plan and an economist has been over it, which is more than you can say for the Liberals or the New Democrats.

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